Wall Street ended last week with a banner day, as the Dow Jones industrial average and the Standard & Poor’s 500 index both posted multi-year highs thanks to a strong employment report. Holding on to those gains in the week ahead will be tough, however.
Stocks feed off data — economic data, earnings reports and corporate news. Good or bad, investors depend on that stream of information to make decisions on their holdings. But in the coming week, there’s simply little news to be had — there are very few relevant economic reports from the government and few earnings reports from market-moving companies.
In the absence of strong data, investors tend to stand pat, and a spate of profit-taking is likely to be inevitable after last week’s strong gains. With the dollar continuing to show weakness and oil remaining above $53 per barrel, there may be little impetus to push stocks higher.
Still, some companies, notably in the technology sector, will begin offering their mid-quarter updates this week, in which they let analysts and investors know how the current quarter’s sales and profits are shaping up. And it would be premature to say that the merger craze of January and February is over.
But barring an unforseen bout of unabashedly good news, treading water may be the best thing to hope for this week.
Despite the climb in oil prices last week, Wall Street turned in a strong week of gains thanks to a surprisingly strong job creation report from the Labor Department. For the week, the Dow rose 0.98 percent, the S&P 500 was up 0.89 percent and the Nasdaq composite index climbed 0.25 percent.
Commerce reports due
Only a bare handful of economic reports are due out in the week ahead, and fewer still are likely to move the market substantially.
On Friday, the Commerce Department will report on the nation’s trade deficit. Economists expect the deficit to have fallen to $56 billion in January from $56.4 billion in December. A better-than-expected deficit figure could help the dollar gain ground against other currencies, which in turn could boost stocks.
The Commerce Department will also report on wholesale inventories Thursday, with inventories expected to rise 0.6 percent for January, compared to 0.4 percent in December. Wall Street is likely to embrace a higher number, since higher inventories mean fewer sales and less of a chance for inflation to take hold.
Earnings: National Semi, Blockbuster
The technology-focused Nasdaq has lagged behind the Dow and S&P 500 for months as investors abandoned the riskier tech sector. A strong showing from National Semiconductor Corp.’s earnings report on Thursday could help turn the sector around. National Semi is expected to earn 16 cents per share for the latest quarter, down from 23 cents a year ago. The stock has recovered considerably since its lowest close of the year, $12 on Sept. 8, rising 67.4 percent to finish Friday at $20.09.
Video rental chain Blockbuster Inc., in a battle to acquire rival Hollywood Entertainment Corp., has seen its stock slide precipitously over the last year, falling 52 percent from a close of $18.08 on March 19, 2004, to finish Friday at $8.67. Blockbuster, reporting earnings Wednesday morning, is expected to earn 5 cents per share in its latest quarter, a sharp drop from the 32 cents a year ago.
For investors in Borders Group Inc., the bookstore chain, its stock has been far less volatile. Borders has risen 24.7 percent since finishing at $21.42 on Aug. 6, closing Friday at $26.71. The company is expected to earn $1.61 per share when it releases earnings Thursday afternoon, up slightly from $1.60 in the year-ago quarter.